Consumer behaviour - and expectations - have evolved
The past two years have brought about a huge change to almost every aspect of our lives. The way we behave as retail consumers is no exception. We haven’t changed only in where and how we shop but also in what we buy. Along with those changes have come altered expectations of the retailers we deal with on a daily basis.
Around the globe, as consumers tried to limit their exposure to enclosed spaces, e-commerce took off in a big way. As a result, how convenient a retailer is to our location has become less important than how quickly they could deliver our purchase.
The ecommerce consumer is more digitally savvy in 2022 than they might have been just a few years ago. Regardless of age and demographic, access to online shopping is far more widespread than it once was (in part thanks to the proliferation of smartphones and falling data costs). Of course, an adjustment in e-commerce and delivery is just one aspect of a retail environment that’s fundamentally different from it was at the beginning of 2020.
With that in mind, it’s worth looking at some of the biggest changes in customer behaviour and expectations over the past two years and what retailers can do to ensure that they respond to them.
1. E-commerce cements its place in the retail mix
The growth of e-commerce has been significant. Globally, e-commerce sales passed $26.7-trillion in 2020 and made up 19% of all retail sales. In SA e-commerce went from making up just 1.8% of total retail sales in 2018 to just over 4% in 2021. While there are signs that growth is slowing a little as restrictions around the globe are eased, it’s an incontrovertible fact that e-commerce is far more of an entrenched force than it’s ever been.
If retailers are to remain competitive, they have to ensure that their digital retail experiences aren’t just as compelling as their in-store ones but surpass them. It’s also important to remember that experience covers everything from a consumer’s first sight of an ad to browsing, payment and delivery tracking, and that it involves transactional and marketing communications as well.
Today's online consumers are looking for an experience. Whether a potential customer is browsing a store on social media for the first time, or a returning customer is logging in again, by using data and communications retailers can start creating personalised online experiences for each individual consumer.
The experience is what will keep customers coming back time and time again, often even overlooking higher prices or longer turnaround times. Of course, the retailers that will really succeed are the ones that can offer their consumer both.
2. Privacy becomes a legal obligation
In July 2021 SA’s Protection of Personal Information Act (Popia) finally came into effect. The act protects the personal data of ordinary citizens and requires organisations, websites and companies to meet minimum conditions for lawful processing of that data. It hasn’t really had time to affect consumer behaviour, but people will increasingly expect companies to demonstrate that they respect their privacy and are handling their data responsibly.
Worryingly, a survey released as Popia was coming into effect found that only 22% of SA businesses are aware of privacy laws governing their marketing activities. Given the vast troves of consumer data that retailers have through loyalty and direct marketing programmes, they will have to be especially careful when it comes to compliance.
3. Value becomes more valuable
While the past two years brought plenty of economic uncertainty at a global level, there’s also no doubt that SA has been hit harder than most. The country’s already fragile economy took a huge beating, especially as vital industries like tourism were all but shut down. Recovery has been hampered by a variety of factors, including ongoing issues at Eskom.
With the country’s unemployment rate at record highs and inflation biting, value is more important than ever. Here we will likely see an amplification of global trends where, as McKinsey points out: “Given consumers’ price sensitivity, value remains the primary reason for [them] to try new brands as well as new places to shop.”
But value isn’t just about price. It’s also about retailers demonstrating convenience and availability along with quality and purpose. Retailers will have to ensure that they demonstrate value in every interaction they have with a customer.
A well-thought-out digital and communications strategy makes shopping easy and convenient for all consumers. Offering the same service level and experience on multiple channels is vital today.
Value is created from a customer's very first interaction with a brand. While we know that the "abandoned cart" e-mail generates the highest return on investment for retailers, we should not underestimate the power behind a good and informative welcome series.
Digital communications have the ability to change and influence behaviours, and this is evident in retail more than in any other industry.
E-mail is definitely one of the best marketing channels for retailers. Not only does it allow brands to advertise deals and sales, it also helps them build lasting relationships with consumers. These relationships aid in customer retention and brand loyalty and in creating brand ambassadors.
4. Multichannel and mobile shopping
With the high rate of smartphone ownership in SA, it should hardly be surprising that most e-commerce purchases (around 63%) are made on mobile devices. But it’s also important to realise that they aren’t simply being done on websites and apps.
Over the past couple of years “non-traditional” shopping channels, including instant messaging and social media, have proliferated. It’s therefore pivotal that retailers not only adopt a multichannel approach to ecommerce but also embrace alternative payment methods.
5. Focus on customer engagement
The best way for retailers to adjust to these behavioural changes and expectations is to focus on customer engagement. By using the data available to them retailers can ensure that they meet customers with the right message, on the right channels, at the right time. That’s just as important as it’s ever been, if not more so.
Dori-Jo Bonner is a strategist at Striata Africa.
The big take-out: Retailers will have to ensure that they demonstrate value in every interaction they have with a consumer.
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